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10.13007/348
Ideas for Leaders #348
Securing Talent with a Superior
Employee Value Proposition
Key Concept
A shift is taking place in the business world; power has moved from employers
to employees. In this Idea, the reasons behind this shift are explored, and
advice is provided to organizations on how to ensure they successfully attract,
develop and retain employees, and remain an ‘employer of choice’.
Idea Summary
Traditionally, financial capital has been viewed as the primary promoter of
growth and profitability for an organization. Though undoubtedly still
important, executives have begun to realise there is something else that is
even more crucial: human capital. How companies attract, develop and retain
talent is fast replacing financial concerns, especially in light of the fact that
today’s employees have more information, more choices and lower switching
costs than ever before; employee retention has become a necessity.
In a White Paper published by IMD Business School, Professor J. Stewart
Black highlights five seismic shifts that are taking place in the current
business environment, which play a role in the changing nature of
organizational talent:
1. Shift in basis of competitive advantage: intangible assets such as brand, culture,
leadership and innovativeness have now assumed greater importance in terms of a company’s
competitive advantage than tangible assets. The principal drivers of these are an
organization’s employees.
2. Shift in competitive scope: the shift from primarily ‘known’ domestic factors (i.e. competitors,
customers, regulators, etc.) to global factors involved in competitive scope has led to a firm’s
strategist becoming more important than the firm’s strategy.
3. Shift in information symmetry: the increase in the use of job websites, social media
networks, etc., has meant that information about salaries, open positions and market worth is
more easily available than ever before.
4. Shift in firm-specific benefits: the trend to tie benefits with tenure (i.e. the longer an
employee stays with a firm, the higher the benefits) has decreased as tendencies to switch jobs
have increased.
5. Shift in talent supply and demand: the gap between supply and demand has been widening
and is expected to widen even more rapidly over the next decade. The imminent retirement of
the ‘baby boom’ generation and ascendancy of generations of ‘baby busts’ means that many
countries will soon see declines in the number of eligible working people. Whenever demand
exceeds supply, the balance of power shifts from employers toward employees.
These five seismic shifts have increased the importance of being an employer
of choice; organizations must implement strategies that will help them address
each of these dimensions, as the ability to attract, retain and engage talent
Authors
Black, J. Stewart
Institutions
IMD
Source
INSIGHTS@IMD
Idea conceived
December 2013
Idea posted
March 2014
DOI number
Subject
HR Management
Leadership
Talent Management
has gone from nice to necessary.
Business Application
According to Black, one approach organizations can take is to focus on
strengthening employee attraction, retention and engagement through a
superior employee value proposition. He points to four categories of benefits
that capture 80% of what employees care about: leaders; the company; the
job; and rewards. Today, employees (like customers) can access more
information about these benefits, and have more choices and lower switching
costs; consequently, they have more power.
Simplistic notions and measures of employee satisfaction (such as employee
surveys) will need to be set aside as measuring employee value proposition is
different from simply measuring employee satisfaction. To an employee,
‘value’ encompasses not just what they get, but what they pay for what they
get (i.e. hours, time away from home, stress, etc.)
Employers must strive harder to understand and build superior employee
value propositions based on what employees want. This, according to Black,
is the key to attracting, retaining and engaging talent.
Further Reading
The War for Leadership Talent: Creating a Superior Employee Value
Proposition. J. Stewart Black. Insights@IMD No. 27 (2013).
Further Relevant Resources
J. Stewart Black’s profile at IMD Business School
IMD Business School's Executive Education profile at IEDP
© Copyright IEDP Ideas for Leaders 2014
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